How do Institutions Constrain Philippine Growth?

Colonial histories, poverty, social ineffective and poor education in the Philippines give rise to weak institution. The so called “elites” compete for rents and they are competing for power in the politics. What is their incentive to do that? They have hunger in power and money. They corrupt; thus causing a political instability. Political instability then will result low economic performance which leads us back in our vicious cycle: a weak institution.
Greif defines institution as a system of rules, beliefs, norms, and organization that together generate a regularity of social behaviour. People’s social behaviour affected the performance in the economy. Note that labor is one of the most important factors of production. Therefore, it contributes a lot in the productivity of a nation.
In geography, there is a so called “environmental determinism” which explains that people’s action, belief, behaviour, and the way people live are determined by the environment around them. This seems like an obvious fact. Take this for instance; if a person lives in a beach his job is most likely a fisherman. The Filipinos also are said to be lazy due also to the climate condition around them. This will make them unproductive. The point is that Filipinos behaviour is actually the one that constrains the growth of the Philippines’ economy.
There is no way for the Philippine economy to grow if the government officials are corrupt. Instability and corruption have a negative impact on investment. Negative impact on investment means a mediocre government.
Political instability causes capital flight. A capital flight causes the interest rate to rise and the currency to fall. The rise in interest rate reduces domestic investment, which slows capital accumulation and economic growth.
Behaviour of the Filipinos is the one that causing a very bad economy in the Philippines. If people will change their expectation about their country and if there will be honest officials, then Philippines’ economy will be better.